This document discusses the emerging investment crowdfunding industry and the impact of the JOBS Act. It summarizes data on global crowdfunding deals and regulations allowing general solicitation. The JOBS Act represents the first major change to securities law in over 70 years by allowing internet platforms to facilitate private capital raising, creating a more efficient process. Cultural trends also support crowdfunding as individuals seek more meaningful investment opportunities.

1. 1
The Global Investment Crowdfunding Industry
Data, Insight & Trends
Jonathan Sandlund
Jonathan Sandlund | @jsandlund
@jsandlund
Wednesday, August 28, 13

2. 2
thecrowdcafe.com research, data and analysis on
the global crowdinvesting industry
localinvestors.org live, think, invest local
about me
Jonathan Sandlund
j@thecrowdcafe.com
@jsandlund
Wednesday, August 28, 13

3. 3
Thank you!
Leading law firm serving the security
crowdfunding industry: Portals;
Crowdpreneurs; The Crowd.
thecrowdcafe.com/NYESN
Download
Wednesday, August 28, 13

4. 4
Intro to Investment Crowdfunding
The Mechanism
Jonathan Sandlund | @jsandlund
Wednesday, August 28, 13

5. 5
Funded$
$
$
$
$
the mechanism
FAMILY FRIENDS
CUSTOMERS
INVESTORS
AFFINITIES
X =
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6. 6
Funded$
$
$
$
$
the mechanism
FAMILY FRIENDS
CUSTOMERS
INVESTORS
AFFINITIES
X =
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7. 7
Funded$
$
$ $
$
the mechanism
FAMILY FRIENDS
CUSTOMERS
INVESTORS
AFFINITIES
X =
Wednesday, August 28, 13

8. 8
Funded$
$
$ $
$
the mechanism
FAMILY FRIENDS
CUSTOMERS
INVESTORS
AFFINITIES
X =
Wednesday, August 28, 13

9. 9
Funded
$
$
$
$
$
the mechanism
FAMILY FRIENDS
CUSTOMERS
INVESTORS
AFFINITIES
X =
Wednesday, August 28, 13

10. 10
Not
Funded
$
$
$ $
$
the mechanism
FAMILY FRIENDS
CUSTOMERS
INVESTORS
AFFINITIES
X =
Wednesday, August 28, 13

11. 11
reward vs. investment-based
~ $5,000
~$160,000
Median Fundraise
~$775,000
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12. 12
Jonathan Sandlund | @jsandlund
The Legalities of Crowdfunding
Title II & Title III of the JOBS Act
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13. The JOBS Act
13
Title II Title III
‣ Lifts ban on general solicitation
and advertising on security
offerings to accredited
investors
‣ Provided issuer takes reasonable
steps to verify accreditation
‣ Must file amended Form D
‣ Businesses Raise up to $1mm
in 12-month period
‣ Investors tiered limits on
investment amount
‣ Rule-making includes SEC and
FINRA
Crowdfunding for
Accredited Investors
Crowdfunding for
Everyone
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14. Accredited Crowdfunding IMPACT
14
‣ Brings dramatic efficiencies to our private capital
markets
• Efficiencies = (Internet) * (Private Sector Innovation)
‣ Geographically, socially indiscriminate
‣ Stands to motivate accredited capital off the
sidelines and into private markets in an enormous
way
Jonathan Sandlund | @jsandlund
Wednesday, August 28, 13

15. Democratized Crowdfunding IMPACT
15
‣ Businesses
• Conversion of Social to Financial Capital
• New Era of Marketing
‣ Investors
• Financial Empowerment
• Trust
• Meaningful Investment
‣ Society
• Equal Opportunity
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16. 16
The U.S. Market
Jonathan Sandlund | @jsandlund
Wednesday, August 28, 13

17. platforms: market segmentation
17
Investment Crowdfunding Platforms
Niche/Affinity"Local" (SMBs)Startups
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18. 18
Global Crowdfunding
What can we learn?
Jonathan Sandlund | @jsandlund
Wednesday, August 28, 13

19. 19
Wednesday, August 28, 13

20. Macro-Data: Selected Sample
20
Equity
180 Deals
$132 Million
Equity
59 Deals
~$16 Million
Debt
2,573 Deals
$227 Million
Equity
28 Deals
$2.6 Million
Equity
11 Deals
$954k
Equity
16 Deals
$15 Million
* Selected sample of platforms
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21. 21
304 Equity
Placements
2,573 Loans
$300+ Million in Crowdfunding
Transactions...
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22. 22
Crowdfunding Models
Innovation, Diversity
Jonathan Sandlund | @jsandlund
Wednesday, August 28, 13

23. 23
‣ A+ to C Risk Bands
Applied
‣ Offer 1, 3, 5 year loans
‣ £5,000 - £1,000,000
‣ Secondary market
‣ Crowdfunded two
$80,000 small business
loans in under 29 minutes
Debt
2,573 Deals
$227 Million
Wednesday, August 28, 13

24. 24
Discovery
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25. 25
Splash Bathroom Accessories Limited
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26. 26
Credit Score History
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27. 27
Key Financials
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28. 28
Questions & Answers
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29. 29
$0!
$2,000,000!
$4,000,000!
$6,000,000!
$8,000,000!
$10,000,000!
$12,000,000!
$14,000,000!
Monthly Loan Originations Since Inception!
August 2010 June 2013
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30. 30
‣ Launched 2010
‣ Sector Focus General (concentration: internet, food & drink)
‣ Lowest Raise $19,000 Highest Raise $2.3 million
‣ Averages (median, n= 48)
‣ Raise $124,800
‣ Equity Offered 16%
‣ Post-Money Valuation $805,000
‣ Number of Investors 52
‣ Investment Size $2,712 (low: $331; high: $16k)
Equity
59 Deals
~$16 Million
Jonathan Sandlund | @jsandlund
Wednesday, August 28, 13

31. 31
‣ Launched July 2012
‣ Sector Focus Internet
‣ Lowest Raise $15,200 Highest Raise 240,000
‣ Averages (median, n=24)
‣ Raise $64,000
‣ Equity Offered 10%
‣ Post-Money Valuation $520,000
‣ Number of Investors 75
‣ Investment Size $1,070
Equity
28 Deals
$2.5 Million
Jonathan Sandlund | @jsandlund
Minimum Investment
$16
Wednesday, August 28, 13

32. 32
‣ Launched Mid-2012
‣ Sector Focus Consumer Products/Retail
‣ Lowest Raise $440,000 Highest Raise $2.4 Million
‣ Averages (median, n=16)
‣ Raise
‣ Number of Investors 15
‣ Investment Size $59,333
Equity
16 Deals
$15 Million
Jonathan Sandlund | @jsandlund
Wednesday, August 28, 13

33. 33
‣ Domain Expertise Founding team has deep experience investing in
consumer product and retail industries
‣ Curated Deal-Flow To date, less than 2% of applications accepted
onto the platform
‣ 3 Weeks Time it took Melt to raise $1,000,000
Jonathan Sandlund | @jsandlund
Equity
16 Deals
$15 Million
Wednesday, August 28, 13

34. 34
The Disruption
Jonathan Sandlund | @jsandlund
Wednesday, August 28, 13

35. 35
Crowd
funding
Technical
Disruption
Entrance of the internet into
the private capital formation
process.
Cultural
Disruption
A desire to connect more
meaningfully with the things
we buy, the things we do, and
the things we invest in.
Two mega-trends colliding. Driving a paradigm shift in early
stage capital markets
Investment Crowdfunding
Wednesday, August 28, 13

36. Summed up...
36
The first major change in security law in 70+
years. Allows the internet to enter the
fundraising process.
Processes moved online, efficiencies realized,
and incumbents with traditional cost
structures obsoleted
What it means...
Technical
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37. This is what it looks like...
37
Technical
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38. Nearly all categories disrupted by the
internet...
38
Except fundraising.
Technical
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39. A fundamentally more efficient
capital formation process
39
Technical
A Big Bank...
Source: http://www-core.nesta.org.uk/library/images/NestaBanks.jpg
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40. But it’s not just structural change
driving the disruption
40
Cultural
It’s cultural.
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41. 41
Chicago Booth: Only 13% of Americans trust the
stock market
Distrust is pervasive
Chicago Booth Financial Trust Index
Cultural
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42. Today little alternative to public markets
42
Tomorrow individuals empowered to invest in the
the companies, causes and people they believe in
Cultural
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43. A cultural shift
43
‣ Web 1.0 The Information Web
‣ Web 2.0 The Connected Web
‣ Web 3.0 The Meaningful Web
Cultural
Wednesday, August 28, 13

44. 44
Jonathan Sandlund
j@thecrowdcafe.com
@jsandlund
Thank You!
thecrowdcafe.com/NYESN
Download
Wednesday, August 28, 13